Difference Between IVA and Debt Management

December 23rd 2009 by News Team

When you are looking at your debt solutions, you may wish to understand the difference between IVA and Debt Management. Each of these are potential a debt solution for those struggling with repayments but it is important that you are aware of the difference between IVA and Debt Management, and which of these two options would be a better debt solution for you:

Debt level: An IVA is typically only suitable for larger levels of unsecured debts of £12,000 or more. Debt Management is more suitable for those with smaller debt levels.

Type of agreement: An IVA is a legally binding agreement between you and your creditors and, once the IVA has been agreed, you are both bound by it. Failure to keep to the terms of an IVA may mean that your creditors can declare you bankrupt.

On the other hand, Debt Management is a much more informal agreement and the terms of your plan can be more flexible if your circumstances change.

Length of agreement: An IVA is typically a 60 month repayment plan where you pay what is affordable over the agreed period of time and any unpaid debt will be written off on completion of the agreement. Debt Management offers no debt write-off and you must repay your debts in full.

Debt Write Off: As mentioned above, an IVA will write off the debt that is unaffordable to you on completion of the agreement. This is the main difference between IVA and Debt Management, as with Debt Management all of your debt will be repaid to your creditors.

Debt Management Plans and IVAs are not the only debt solutions available, and the right one for you will be dependant on your situation.

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